Daejan – bought for both earnings and assets

I’ve bought Daejan (LSE:DJAN) for my modified price earnings ratio portfolio. It has two outstanding virtues. First its shares, at my buying price of £52.90, are merely seven times earnings per share when EPS is averaged over the last decade. Second, its net assets are worth £120 per share, thus it stands on a discount to net assets of 56% (no, it does not have high borrowing).  Daejan holds residential blocks and commercial property in London, New York and elsewhere in the UK and USA, and rents them out. Occasionally there are opportunites to develop properties to enhance value, e.g. it holds a block on Oxford Street which it is going to redevelop soon.

Mr Market seems convinced that there will be a recession in the UK and USA of such ferocity that rents are going to fall dramatically and property market values halve.

Well, maybe. In the early 1990s recession – which was pretty nasty - Daejan’s portfolio valuation fell by no more than 10%

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